The Kolesovs’ Elecon reaches nearly 2 billion rubles of dividends
The main producer of electronic connectors for the Defence and Industrial Complex has updated its dividend payout record
Elecon plant controlled by Russian Helicopters’ new director Nikolay Kolesov reported on allocation 1,999 billion rubles to pay out dividends for the last year. This is the absolute high in the last years — earlier, the shareholders used to be paid 1.3 billion, then 0,99 billion rubles. The defence plant seems to be dramatically changing the strategy, from saving to spending. Investment analyst, Candidate for Economic Sciences Alexander Razuvayev thinks this can become a prologue to join Moscow Exchange.
Another 2 billion from previous years’ profit
Elecon Plant from Kazan continued the policy of record-high dividend payouts. By early May, the enterprise transferred 1 billion 999 million 902,851 rubles, or 187 rubles per common share. The payouts were made from previous years’ non-distributed profit, the company said.
The money itself is transferred in cash (by transferring money to banking accounts or via mail if there is no information about banking accounts), the company clarified. The decision to payout dividends was made at an unscheduled meeting of shareholders. The final sum turned out to be 1,34 billion rubles more than the previous one-time reward, which was paid last August.
It is important to note that Elecon Plant’s shares aren’t traded at Russian exchanges and have never been there. What’s more, the company doesn’t have preferred shares. It seems to be related to the enterprise’s status of defence company. This is why it is impossible to calculate such an indicator as dividend profit. We can say that shareholders made surplus profit because the nominal cost of a common stock is 10 rubles.
“The issuer isn’t an organisation that provided covered bonds of another issuer that were allowed to trade according to Clause 10.10 of the Provision of the Bank of Russia as of 30 December 2014 No. 454 On Disclosure of Information By Security Issuers, the given information isn’t included to the issuer’s report (quarterly report) by the Issuer, it is regularly indicated in the company’s report.
Key supplier of electrical connectors
Elecon Plant is Russia’s key enterprise designing and making cylindrical connectors for all sectors of the defence and civil industry as well as special umbilical connectors for aviation, space and naval machinery. As a result of the analysis of the market of Russian connector producers, the company’s share is 72% among competitive products (as of 2020). The company produces over 75 types of connectors, including 40,000 part types with counts from 1 to 128, for aviation, railway, inland equipment, different sectors of the industry.
Before the imposition of sanctions on the Russian defence industry, the enterprise’s annual revenue varies from 6 to 7 billion rubles. Net profit fluctuated from 1.5 to 1.9 billion rubles a year. Head of Russian Helicopters Nikolay Kolesov owns the enterprise. Moreover, other defence enterprises controlled by the influential manager decided not to pay dividends for 2022. Some other mechanical engineering enterprises refused to pay out dividends too.
In general the May payouts became third in Elecon’s new dividend strategy. Earlier, the enterprise hadn’t paid dividends for 10 years. According to Realnoe Vremya’s interlocutors, the enterprise refused its conservative saving policy as early as last year switching to active payouts to its shareholders. So in August 2022, Elecon opened a kind of gap from 126 rubles per common share. A total of 1,349 billion rubles were transferred. Later, in November 2022, the board of directors of the enterprise again convened an extraordinary meeting of shareholders. It was decided to pay 93 rubles 78 kopeks per common share then. A total of 999 million 928,499 rubles were allocated. In both cases, previous years’ non-distributed profit became the funding source of payouts.
So Elecon spent 2,288 billion rubles last year and now another nearly 2 billion rubles. The enterprise doesn’t know if the dividends will be paid out twice like last year.
The May money transfer is impressive because its amount is comparable with the amount of the enterprise’s net profit in 2020 before the sanctions. At that moment, it totalled 1,824 billion rubles, reads the company’s annual report. By that moment, the total accumulated amount of non-distributed profit amounted to 8,854 billion rubles. In other words, the plant’s safety margin after the tranches remains sufficient. Perhaps, the change of the trend in the dividend policy is related to the US sanctions imposed on the Kazan enterprise, which were designed by late 2022 first. As it is seen, they continue working. The State Department imposed sanctions on three Russian enterprises with Elecon among them, because they violate the US legislation on the proliferation of weapons of mass destruction related to Iran, DPRK and Syria.
“They are behaving like a market company and paying out dividends”
However, Director of the Investment and Corporate Business Department of Digit Broker Alexander Tsyganov didn’t relate the dividend payouts with the sanctions:
According to him, one can assume why the closed enterprise working in the military sphere too and was imposed American sanctions decided to pay out dividends in 2022 and 2023.
According to investment analyst, Candidate for Economic Sciences Alexander Razuvayev, the generous dividends can be a prologue for Elecon shares to appear at Moscow Exchange:
From his point of view, big dividend payouts can be related to the preparation for IPO. “This step is very logical. It doesn’t necessarily have to be a big package, 10-15% are enough. What will it give? Current shareholders can convert their share in cash. Defence plants are now earning very well and it is good they are behaving like a market company and paying out dividends. It is the most civilised way, these actions can become a prologue of entrance to the Russian exchange,” he assumed.
In turn, Strategic Director Finam Yaroslav Kabakov noted the following: “Considering that the Tatarstan Ministry of Land is the founder and now the major shareholder, dividend payout is mainly linked with regional budget incomes. Obviously, the rise in revenuw and profit in the last years creates the possibility of increasing budget incomes.”